Freddie Mac posts 4Q net income of $227 million.

PositionNEWS ROOM - Financial report

>> On Feb. 19, Freddie Mac released its earnings report for the fourth quarter showing the company earned net income of $227 million and comprehensive income of $251 million. The company also reported full-year profit for 2014 that was significantly under 2013's performance.

The earnings press release also showed the substantial contribution made by legal settlements to the full year's net income. The company noted that it pulled in $6.1 billion in settlement income last year related to litigation over private-label securities.

Freddie Mac noted that last year was the third straight year of profitability for the company, which remains in conservatorship. The full-year net income in 2014 was $7.7 billion. Full-year comprehensive income was $9.4 billion.

The full-year profit was down substantially from 2013. Net income for 2013 was $48.7 billion. And the 2013 comprehensive income total was $51.6 billion. The company noted that 2013 financial results benefited from the release of the deferred tax asset valuation allowance. The 2013 results included an income tax benefit of $23.3 billion.

In last year's fourth quarter, net interest income ($3.6 billion) won out barely over derivative losses ($3.4 billion) to deliver the net profit.

The company said that based on its net worth of $2.7 billion as of Dec. 31, 2014, its March 2015 dividend obligation to the Treasury department will be $0.9 billion. Including that dividend payment, Freddie will have paid total cash dividends to Treasury of $91.8 billion.

That compares with the total amount of senior preferred stock held by Treasury of $72.3 billion (essentially the cash advanced to the company by Treasury). Essentially meaning Freddie Mac has returned an additional $19.6 billion to the federal government over and above what it was advanced.

In its earnings press release, the company noted that business continues to improve and the post-2008 book of business had reached 60 percent of Freddie's single-family credit guarantee portfolio as of year-end 2014.

The company said its delinquency rates continued to decline last year. Freddie Mac's single-family serious delinquency rate as of Dec...

To continue reading

FREE SIGN UP